Q&A: Venezuela can fix its own oil industry

Rafael Ramirez served as Venezuela’s oil minister from 2002-2013 and concurrent chief executive of state-owned PdV from 2004-2013, a tumultuous period marked by an oil strike and nationalizations under the late president Hugo Chavez. In this interview, edited for length and clarity, Ramirez, now in exile in Europe, argues Venezuela can handle the challenges plaguing its oil sector on its own.

Venezuela’s national oil company PdV is a shadow of its former self. What went wrong?

I left (President Nicolas) Maduro a company valued at $284bn, the world’s fifth largest company.

Production was at 3mn b/d, and we had refining capacity of 1.2mn b/d. We sold close to 700,000 b/d of products in the domestic market and exported 400,000 b/d. The company had annual revenue of $120bn and contributed $40bn to the treasury.

There have not been any financial numbers since 2015. Now Venezuela has little crude production, no fuel, it is in operational collapse. There are more than 100 managers in prison. This is about political persecution and negligence.

What role do US sanctions play here?

The government blames US sanctions for impeding exports, but in 2014 I left PdV’s fleet with 37 of its own tankers and with the joint ventures we had 87 tankers, capable of handling 60pc of our exports. If those tankers were operating, we would not have any problem with the sanctions. It is the same with the refineries. If they were operating, we would not have to import fuel.

Is PdV beyond redemption?

The infrastructure is broken, but it can be fixed. The problem is political. As long as Maduro is in power, it will not change.

We were ahead of everyone on production, and now we are at the bottom. What Venezuela says in Opec does not matter to anyone. The last three ministers did not have a clue, they have nothing to say.

The current minister can noteven leave the country, and he knows nothing about oil. As for exports, I always asked: «Why are we going to unravel a relationship with the US? They need our oil. They are producing a lot of light shale crude, this is ideal, we can blend it.»

Maduro has destroyed it all. Whether the model is sustainable in time, that is another matter. But it went well for us.

Many Venezuelans date PdV’s problems back to the 2002-03 oil strike. That is when you came on board as oil minister. How do you interpret that watershed event?

This was a moment in which a lot of talent was lost. But the strikers were to blame. They thought they were the company’s owners. They wanted to paralyze the industry until the government fell.

It is true 18,000 managers left, but 20,000 stayed, so I did not restart the industry with Iranians or Martians. Many stayed.

This sabotage was like a coup. We did not just lose money from oil sales. They damaged the refineries and the oil fields. It is as if a group of doctors suspended surgeries. You have no right to do that. Saudi Arabia would never have tolerated that.

Did they want a civil war? If it was a pineapple factory, that is one thing, but this was oil.

Then there were the 2007 nationalizations, and subsequent efforts to bring back investment.

ExxonMobil, Chevron made a lot of money in Venezuela, you just can not let them exploit you like that. With the nationalization 33 companies signed on. Only two did not accept this — ExxonMobil and ConocoPhillips. The rest did.

It is not true that one has to give up the industry to garner investment. Our law allows flexibility, but the oil is ours.

What are your thoughts on PdV’s new management led by chief executive Asdrubal Chavez?

Asdrubal Chavez is there because of his last name. Maduro is using the Chavez franchise.

The workers’ benefits were taken away, so he has no support. The group of interests around Maduro wanted PdV and they got it, then they destroyed it. And now they want to privatize it.

We have to solve these problems on our own. And I know as soon as we have a political change, we can fix it.

Is the political opposition charting a better course?

The opposition has a National Plan which is nothing more than the 1990s «apertura». It seems in 20 years the opposition has not learned a thing. The oil industry belongs to the Venezuelan people, and the opposition wants to strip them of that.

The damage is terrible, but the answer is not the IMF or the World Bank, it is with our own resources.

We have been working on a recovery plan. In the Orinoco oil belt, we need to regenerate one area, produce 500,000 b/d, and hedge production like the US does with fracking.

With very little effort, you can produce, field by field, starting with eastern Venezuela, then the oil belt and then Lake Maracaibo.

Are we seeing the twilight of the oil industry more generally?

In a post-Covid economy, people are going to use a lot of hydrocarbons. It is true the world is changing, and we have to be kind to the environment, but we have a long way to go to ensure energy access.

To everyone who says «Abandon oil!», I say, «You abandon it.» We are going to keep producing and this is a reality.

What are your future plans?

I love my country and will return as soon as I can. We need a lot of ideas and perspectives, and to strengthen our institutions. One half of the country cannot impose its vision on the other half. That was a mistake. We need a more tolerant country.

Harvest Natural Resources recently dropped its US lawsuit against you for allegedly demanding bribes for unwinding its former PetroDelta joint venture. What happened there?

Harvest wanted to criminalize our application of the law and make me a scapegoat. They filed a reckless lawsuit, which they could not prove. Before losing in court they decided to drop the case.

The only thing I am grateful for is that I had this one opportunity to defend myself. I cannot go to Venezuela to defend myself because there is no rule of law there.